Global engineering and construction deals insights: Q3 2019

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Executive summary

Overall M&A value in Q3 2019 continued the declining trend the sector has experienced throughout the current year, falling 29% versus Q2 2019 and a similar decline versus Q3 2018. Despite continued demand for infrastructure improvements on the back of ongoing global urbanization and the shift to a global digital economy, outside factors from balkanization of the deals environment, continued trade head winds and concerns with the economic outlook, have all weighed on M&A activity in the sector. One positive trend that we believe underscores the underlying favorable deal characteristics is the recovery of M&A volume in Q3 2019 which increased 8% versus Q2 2019 and almost 9% versus Q3 2018.  While the increase in M&A volume is a leading indicator, until some of the overarching head winds (e.g., trade tensions) subside, M&A activity will likely be restrained for the balance of the year.

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“M&A volume picked up in Q319 reversing the decline the sector has experienced since Q318, and reflecting improving underlying sentiment of the opportunities in the sector.”

Colin McIntyre, US Engineering and Construction Deals Leader

Trends and highlights

  • Deal value in Q3 2019, declined by 29% to $16.3 billion over Q2 2019. Deal value for YTD 2019 also declined by 8% to $62.7 billion when compared to YTD 2018.
  • In Q3 2019, the deal volume grew by 8% to 644 deals vis-à-vis Q2 2019, but in YTD 2019 the deal volume declined by 5% to 1,829 deals when compared with YTD 2018.
  • Average deal size in Q3 2019 decreased by 29% to $75.1 million, when compared to Q2 2019. Similarly in YTD 2019 the average deal size declined slightly by 3% to $98 billion when compared with YTD 2018.
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Highlights of deal activity

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Key announced transactions (YTD 2019)

Announced

Target name

Target nation

Acquirer name

Acquirer nation

Status

Deal value*

Category

02/21/19

Vodafone Europe BV-Mobile Tower Assets

Italy

Infrastrutture Wireless Italiane SPA

Italy

Pending

5,803

Construction

01/10/19

Beijing Easyhome Home New Retailing Chain Group Co. Ltd.

China

Wuhan Zhongnan Commercial Group Co. Ltd.

China

Pending

5,709

Construction Materials Manufacturing

09/03/19

APi Group Inc.

United States

J2 Acquisition Ltd.

United Kingdom

Pending

2,317

Construction

05/09/19

Holcim Philippines Inc.

Philippines

San Miguel Corp.

Philippines

Pending

2,150

Construction Materials Manufacturing

07/16/19

CRH PLC-Europe Distribution Business

Netherlands

Blackstone Group Inc.

United States

Pending

1,902

Construction Materials Manufacturing

05/30/19

Eaton Towers Holding Ltd.

United Kingdom

ATC Heston BV

Netherlands

Pending

1,850

Construction

04/01/19

Zhejiang Construction Investment Group Co. Ltd.

China

Dohia Group Co. Ltd.

China

Pending

1,368

Construction

05/28/19

Linden Ltd., Galliford Try Employment Ltd.

United Kingdom

Bovis Homes Group PLC

United Kingdom

Pending

1,327

Home Building

06/13/19

Societa Iniziative Autostradali and Servizi SpA

Italy

ASTM SpA

Italy

Pending

1,216

Construction

06/20/19

Daewoo Engineering and Construction Co. Ltd.

South Korea

KDB Investment No.1 Ltd.

South Korea

Completed

1,162

Construction

Source: Thomson Reuters and other publicly available sources. *In Million USD


Engineering and construction deals outlook

The underlying improvement in M&A transaction volume was a bright spot in an otherwise disappointing year for M&A within the sector. The head winds of continued trade tensions and underlying worries about a coming economic slowdown continue to weigh heavily on the sector despite otherwise underlying favorable data that will likely continue to fuel opportunities for E&C services and, in turn, create significant revenue opportunity. Q4 2019 is shaping up to be an interesting quarter with a number of geopolitical events coming to the forefront including the potential resolution of a Brexit plan and continued trade discussions between the US and China, which if resolved will likely help resolve some of the overhang that has held back M&A activity in the sector during the YTD September period.  

About the data

The information presented in this report is an analysis of deals in the global E&C industry. Deal information was sourced from Thomson Reuters and includes deals for which targets have an SIC code that falls into one of 60 E&C industry groups. Certain adjustments have been made to the information to exclude transactions which are not specific to E&C or incorporate relevant transactions that were omitted from the SIC industry codes.

This analysis includes all individual mergers, acquisitions, and divestitures for disclosed or undisclosed values, leveraged buyouts, privatizations, minority stake purchases, and acquisitions of remaining interest announced between October 1, 2016 and September 30, 2019, with a deal status of completed, partially completed, pending, pending regulatory and pending completion, and excludes all rumors and seeking buyers. Additionally, transactions that are spin-offs through distribution to existing shareholders are included.

Percentages and values are rounded to the nearest whole number which may result in minor differences when summing totals.

Contact us

Colin McIntyre

Engineering and Construction Deals Leader, PwC US

Michael Sobolewski

Engineering & Construction Industry Leader, PwC US

Jonathan Hook

Global Engineering and Construction Leader, PwC United Kingdom

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